Buffett aide Sokol back in the spotlight

David Sokol, a former top deputy to
Warren Buffett
, knew more about Lubrizol’s interest in a potential deal with Berkshire Hathaway than previously disclosed – a revelation that comes as the government examines Mr Sokol’s personal stake in the chemical manufacturer.

A regulatory filing on Monday shows that Mr Sokol was aware in mid-December that Lubrizol’s chief executive planned to talk to his board about a possible acquisition by Berkshire. A few weeks later, Mr Sokol bought nearly 100,000 Lubrizol shares.

The fresh details again cast a spotlight on Mr Sokol’s decision to take a $US10 million stake in Lubrizol while orchestrating a potential take­over of it.

The Securities and Exchange Commission is considering whether to open a formal investigation.

Mr Sokol’s legal liability in part hinges on whether he acted on material, confidential information for his own personal gain. Mr Sokol abruptly resigned his managerial post at Berkshire last month, and the value of his Lubrizol stake rose by $US3 million after Berkshire announced its $US9 billion bid.

“I think someone could look at this set of facts and say there’s a potential problem here," former federal prosecutor Richard Scheff said. “This raises a concern for me."

But Daniel Hurson, a former lawyer in the SEC’s enforcement office, said the insider trading rules were murky and the government might find it difficult to prove Mr Sokol’s trades were anything more than “innocent purchases".

Mr Sokol has said that he did nothing wrong, and Mr Buffett has agreed. “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful," Mr Buffett said in a letter last month, noting that Mr Sokol made the trades before pitching the Lubrizol deal to Berkshire.